The Central Board of Direct Taxes (CBDT) has asked the tax department to examine the top 30 cases of tax deducted at source (TDS) falling short and issue tax demand by June 30.
The directive is part of a recent action plan floated by the apex decision-making body in matters of income tax (I-T) in which it said to prioritise prosecution filing, disposal of pending appeals, and enhanced use of technology in the first half of the current financial year (2023-24).
“There are instances where the assessee deducts TDS for such an amount which turns out to be lower than the rates prescribed in the Income Tax Act. That could be deliberate or due to ignorance,” a tax official said. “While filing the return, one should keep in mind that on every payment, the amount of tax deducted is not short of the amount which should have been deducted if tax were to be deducted at the prescribed rate. If such a case is found, the balance tax should immediately be deposited vide a new challan.”
The deductor may face a penalty equal to the amount that was not deducted or remitted. He may even be liable to face rigorous imprisonment for a minimum of three months and a maximum of seven years.
TDS usually constitutes the lion’s share of about 47 per cent of gross direct tax collections. And for 2023-24, the contribution of TDS in total direct tax collection is likely to increase significantly due to certain measures, including TDS on online gaming and interest income earned on listed debt securities.
Outlining the road map for 2023-24, the CBDT has given directives for completing the prosecution process and filing charge sheets by the end of June in cases identified by I-T Systems until March 31.
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- To prioritise TDS default, short payment of deduction
- Enhance use of technology, digitise all tax returns
- File prosecution in cases completed till March 31
- Centralised communication to assess non-responsive cases
- Disposal of at least 100 appeals by June-end
This apart, it has pushed for the disposal of pending tax appeals filed before April 2019. It said that officials should pass at least 100 appellate orders by June 30. Appeals in which there are systemic difficulties in disposal are to be reported by May 20 and accordingly, a report will be prepared.
The CBDT also outlined refund-related actions. It said that refunds should be approved where scrutiny assessments have been completed. And that it should be over by the end of this month.
The action plan also talks about enhanced use of technology and asked officials to digitise all the returns of the assessment year 2022-23 by May-end.
It has asked faceless assessment units to make provisions for the completion of assessments in a systematic and time-bound manner. For instance, they have been asked to allocate fresh penalties and centralised communication to assessees in non-responsive cases.
It also suggested sharing information with other agencies in a time-bound manner and that there should be 100 per cent submission of information in requests by other agencies by the end of the month.